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The Short Sale Revisited

Let me say again that I am ALMOST totally opposed to short sales. I suppose that in very limited circumstances a short sale is the "best" solution to an otherwise unsolvable problem.

There are at least two parties to the short sale who shouldn't want to go through the ordeal: The Buyer and The Seller.

The buyer makes an offer on a property for less than what is owed. Either the seller reaches down in his pocket to make up the deficit or he asks the lender to accept less than they are owed.

Unless foreclosure is imminent, neither the seller nor the lender wants to "cover" this short-fall. With a looming REO the lender's loss mitigation department might be induced to accept the short sale. But they aren't going to make it easy for anyone.

If the seller got his loan with little or no documentation, he is going to be shocked by the documentation that tha bank now requires. And he better be careful. If what he says now is significantly different from what he said before to induce the lender to make the loan, he could have a big problem. And the big problem is that after all the chips have fallen, somebody is going to be made to "pay" for these losses.

After the S&L crisis in the '80s, the government (both state and federal) went after the culprits. They decided that the blame should fall on the appraisers. Many appraisers went to prison. And they were just doing their JOB!

So who are they going to blame this time?

Now from the Buyer's point of view it is also bad. He makes an offer to purchase, gets it "accepted" by the seller,arranges his financing, and still does not have an actual "accepted" offer. The seller's lender has to approve the transaction. They are going to make everybody's life miserable. talk about jumping through hoops.

The closing date is a mystery. Even IF it is going to close is a mystery. The buyer would be better off to look for something else that doesn't require a short sale. If the ONLY reason he is buying a short sale is to "steal" the property then shame on him.

The real estate agents involved in this transaction should be looking at themselves: are they serving their clients in a fiduciary manner?

In stead of short sales let's try some creative financing. Sell these properties to clients that have NO credit but do have some cash. It won't take much if the Seller is willing to walk with no money at close of escrow.

All of you who are salivating at the prospect of multitudinous short sales should consider the effect of that on your real estate merket. Do you want a downward price spiral?

Posted by Bill Roberts - "Baby Boomer" Retirement Planning on 07/10/2007 03:55 PM

Comments (56)

short sale, loss mitigation, foreclosure, crisis

56 Comments on The Short Sale Revisited

JUL

2007

Great points Bill! You posts are alwasy very informative.

Rey, I'm a missionary on this subject. I'm looking for "converts'

Bill Roberts

Bill,

You are so on the money and yet so far off the mark.

First, let me say that I enjoy your posts and respect your point of view - it is so close to mine -yet we have such a fundamental difference.

The point you made on a "No doc" loan (and even the Stated Income products) I believe will lead to either those buyers or the loan officers who put then in the loan. The inside joke was that these were "Liars Loans" and the loan officers were given a licensee to lie to make the deals happen.

On one hand, I have a problem blaming the actual lenders - but they must accept their role in this fiasco - after all, it was their that was dangled.

Then the actual loan officers looking to do yet another deal - we all remember how busy everyone was just a couple of short years ago.

And what about the REALTORS who conspired with the lenders and the buyers?

Do you think the sellers who sold their homes for more than they were worth are culpable?

I understand how difficult it is for the buyer to sit and wait. Of course they are in the deal to get a deal (maybe not a steal) and it can be very frustrating to wait so long and be so uncertain as to what will happen and when.

I think the biggest difference we have is the solution - I do not believe \their are any where enough cash rich buyers without credit to buy all of the Short Sale listings in my market - let alone yours. And then what, we sell some poor guy an overpriced home to help fix a national problem and he is going to make the difference.

Bill, please take off those rose-colored glasses and lets figure out a better solution that that!

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Real Estate

PS - Thanks for the MeMe

JUL

2007

Hi John, Welcome back. I haven't heard from you in a couple of days. As we discussed your market may be a special case. Home values have traditionally been a function of monthly payments. When you throw in a bunch of speculators and 1% start rates prices go crazy. In my area there are enough "real" buyers to sustain the market. Your area might be over-built. If so then your prices need to pull back. So be it. But that doesn't change the basic controversy over short sales.

I admit that I don't like them. I feel that they are a time bomb ticking and we are going to be at the center of the blast.

This doesn't mean we can't still be friends.

Bill Roberts

Bill I don't think "anyone" is happy with the way the market is and I am sure finger pointing is a habit more than helping to solve the problem that is at hand and doesn't seem to be going anywhere anytime soon. So what do you propose to do with the numerous number of sellers that are in pre-foreclosure and don't want to just sit there and let the innocent lenders kick them to the curb on day of trustee sale? Do you not feel that people should have an option (one of which is short sale) -- an option to make the effort to get out from under their situation with the least amount of pain.

Sure they all understand that the lenders are not just waiting for the short sale request so that they can approve and everyone can move on. It is the agent's responsibility to explain to both seller and buyer that the process will be frustrating to say the least because the lender has a process that only that seem to know and they are working so many other requests and workload that it won't be a 10 day turn around but that their option will be considered.

The buyer is sometimes getting a good deal and sometimes not really. Some of the short sale homes are not in the best of shape (of which the lenders are not really aware of the condiction of the home). The owners have been struggling to just keep up so some of the maintenance is not done and the property is not in the best of condition.

We as agents see this when we are there talking and trying to approach the listing in the best manner. I feel that the sellers are in need of help and support and I try to do the best I can to help in anyway that I can. Sure its a listing and hopefully a sale but also its a "helping hand" that will be remembered.

I appreciate everyone's opinion, this is mine.

Hi Rosemary,

Thank you for taking the time to respond.

I personally believe that in at least 90% of the short sale situations, the seller would be better off "being kicked to the curb" as you say. For one thing they won't be supplying evidence against themselves. And they will probably be able to walk away with more money.

But as a real estate professional your duty is to serve your client as if it were your own money you were talking about. If you can't find a way to sell his house for at least as much as he owes, then you really aren't helping.

Bill Roberts

Bill,

I thought they quit making soap boxes 20 years ago . . . SHORT SALES ARE A NECESSARY FUNCTION in todays market - If you have so many cash rich quslified buyers - bring them up to Hemet - our medium prioced home is back under $300K -so bring them up here and lets write some contracts.

John Occhi, Hemet CA REALTOR
Mission Grove Realty

John,

I don't try to knock you off your soap box. Somehow I think that we will reach an accord on this issue.

Maybe what we need to do is sit down and talk about it. I'm not opposed to coming to Hemet. I was up there six months ago looking at some commercial property. I thought at the time that the downtown was too big for the population. Not a good situation for commercial property.

Maybe with low-cost housing in the area you are poised for some population growth.

Bill Roberts

Bill, I hear you point. But reality is that short sales are an option. To some it will not work well, and to others it is the best option for them. Being in a situation is stress, hair pulling, and health threatening. Being able to get out with what you may feel is the best option for you may help to relieve that stressful, hair pulling and avoid severe health issues - worrying. So it is good for some and not a good idea for others is the way I see it.

Short sale is not just about the short payoff, its the whole process that our sellers and buyers have to be willing to go through. At the end of the day, hopefullly the seller has had time to adjust to their decision and are now ready to move on and feel that they made the best option at hand and the buyers well hopefully they will have years of enjoyment in their new home. The lender, hopefully they will take the mortgage insurance money that they received as well as the sale money and call it even.

But best of all hopefully the HR1876 Bill that has passed the Senate and is in now in Congress will pass and allievate home owners from the IRS taxes that are associated with Short Sale. And once that is done, hopefully there will be other bills to protect the sellers that are in one of the worst situations a family can find themselves in and not punish them a second or third time for this mishap.

I agree with others in stating that short sales are here - rather we like them or not.

OK Rosemary, TRUCE! If you can't use some "creative" techniques to solve the problem and be sure that everybody knows the risks, then go ahead with the short sale. Just sure that it was a full doc loan. If you advise a client to go ahead with a short sale and they give evidence against themselves, you could be held accountable.

Bill Roberts

Bill, let me make sure I understand your comment. Are you telling me that I can be held accountable for my seller and his loan officer behavior for the purchase of the home that I am now trying to sell for them? If my seller had the loan for sometime, paying on it and then lost his job that I can somehow get in trouble for doing a short sale of which he asked me to do -- and I had absolutely nothing to do with him purchasing the home in the first place? Is this what you are saying?

Sorry but I just want to make sure I am reading what you are saying correctly. I clearly do not want to be doing anything that will put me in trouble or my clients.

Rosemary,

NO, what I am saying is that if you advise them to proceed with a short sale and they subsequently give evidence against themselves, when they are prosecuted and their lawyer finds out that you put them in this situation he will come after you. You are not responsible for what went before, but you are definitely responsible for the results of your advice.

Bill Roberts

Would it be the same, if its a regular sale, and the seller actually did not qualify for the loan that got them the property in the first place AND it was appraised way too high? I come along and list and sell the property and this stuff comes out, would I be responsible for the results of my advice?

I ask because it is not necessarily my advice that the seller is taking in doing the short sale. They usually know that they can ask for a short sale when you go to tak etheir listing. Are you telling me I should not take their listing if it is going to be a short sale. You can pretty much tell that right from the start of the discussion.

They are in default, they are way behind, they don't see how they can catch it up, their credit is way messed up, they have tried to get refinanced and been turned down, they got in this situation because they either lost their job or low of some of their income, and they owe more than the property is worth and they don't have money to pay the difference --- what would that be but a short sale possibility?

Are you saying walk away from this type of listing?

Bill

What if the property's value was inflated when the loan was originated?

How do you feel about a short sale then?

I agree that diminishing housing values have serious consequence overall, but there's no question that values have been inflated for years.

A short sale is arguably a better option than a judicial sale for the lender and the community.

JUL

2007

Hi Ed,

Thanks for coming. If the "value" was fraudulently inflated there is going to be more people culpable than just the borrower but if the inflated price was the result of market action then price is not the issue. My concern is for the buyer who got a low doc or stated income loan and misrepresented their qualifications. The short sale process requires them to give full documentation of their financial condition. If this disclosure is at variance with their contentions at the time the origional loan was approved they have just given evidence against themselves. The real estate agent that recommended that they do this is NOT working in the best interests of their client.

I hope this makes my concerns about short sales clear.

Bill Roberts

Oh Rosemary,

Nothing I said appies to a "regular" sale. If the lender is being paid in full and the seller is not communicating with the lender the problem will probably go away.

But if you walk into an obvious short sale situation and you don't explore the ramifications of the short sale on the seller you have violated your fiduciary duty.

Just be careful. You will probably have to walk away from some listing opportunities. You just can't "save" everybkdy.

Bill Roberts

Bill,

I think we just found our common ground on the topic of short sales.

I do not believe that you believe that short sales are categorically bad - you believe they are bad for those who falsified supporting documents in order to obtain a loan. In this I couldn't agree with you more.

However, this is still a rather small percentage of the actual short sales currently taking place - as far as I can tell. I don't think anyone is publicly keeping track of how many liars are losing their home compared to how many liars are able to stay in their homes. I've searched - but I can't find that statistic. If you have it, please share. (Maybe someone knows what percentage of the loans written in 2005 and 2006 were this product)

So, if we agree those who have a "Liars Loan" (No Doc / Stated Income) are better off packing the U-Haul and disappearing into the sunset without talking to their lenders at all; then can we agree that for those who did no lie to get their homes but still find themselves with escalating mortgage payments and depreciating home value and have a legitimate hardship that just maybe a short sale can be explored as an alternative to foreclosure?

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Yes John, Now we are communicating! Of those non-liars that can't be saved by trying some sort of "creative" financing the short sale is probably a good solution.

See what conversation can accomplish?

See you soon,

Bill Roberts

Between John and Bill I now have a better understanding. I will agree that I do not want to get into the "liar side" of short sales but I do have another question. Unless I go through and check every detail, how in the world am I going to know if my seller was a part of the "liar loans" vs "the no lie loan". How would I as the agent know this or go about finding out? Will the courts hold me accountible for the seller and their loan officer's misdoings. When I get involved, the seller is able to show with documents that he was paying his loan, he lost his job and that is what put him in a hardship. Now if he write a hardship letter and say something that is not true and he sign it --- should I conduct a thorough investigating myself (with no real investigative qualifications) to be sure his every word is true or should I make sure that what I represent is true and go ahead and submit the offer and request for short sale approval.

Is this to me is kinda like doing someone's taxes. If you don't know all the facts and have no way of finding all that out, are you responsible for the lies they tell?

I know I can't help everybody, but I also know that there are some people out there that are really in need of some help and those are the ones that I am looking for. To just shut down and say "no short sales" is to me not trying to help anyone, with the market as it is now. Again, this is just my opinion.

OK Rosemary, I'm not sure what your motivation is for your questions. We are not talking about what got the seller in financial difficulty. He may be an innocent victim in that situation, but if he lied to get his loan and YOU advise him to do a short sale, then YOU are hurting your seller.

Bill Roberts

Bill Roberts - I think I should print those words out and mail them to you everyday for a month - just to keep you focused that SHORT SALES ARE NOT EVIL!!! I love that you said, and I quote, "can't be saved by trying some sort of "creative" financing the short sale is probably a good solution."

Yes, conversation is wonderful....

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Rosemary Brooks - I think you are reading too much into it. Certainly I cannot say that you will not be called into the middle of something that was not your fault - but receiving the blame and being at fault are two completely different things (this is why so many prisoners are being released because of DNA evidence - they certainly took the blame and paid the price - but it was not their fault, now was it. so, yes anything can happen to anyone and don't ever forget it)

However, with that said, just ask your homeowner. But the fear of Jesus in them if they lied and move forward ask them if they would prefer the Orange Jumpsuit or the basic black and white stripes (my favorite). Trust me, if someone created a phony pay stub - they know it. If they manufactured false tax returns - they know it. If someone used another's bank statement and doctored their name onto the photo copy that was submitted for review - they definitely know it.

Neither your job or your training requires you to be a forensic accountant looking for loops in their story. You just need to make them aware of the repercussions for lying on a federally insured loan application. Drop the name FBI, Secret Service and they may get the picture and just order the U-Haul right there on the spot. Of course, if you are a well prepared REALTOR, you might be able to save them the trouble of looking it up.

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Thank you John. Now if you would just spend this much energy on my retirement series...

Bill Roberts

Sorry Bill, but my focus is on making money - not spending it right now. When you read the MeMe you blessed me with, you'll know a little more about me...

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty

Thanks John for the clarity. I am glad that I questioned it so that I can now understand the post. And I think maybe I just got in the middle of a debate that was way over my head! I appreciate your explanation and it does make sense to me now. I just wanted to be sure that what Bill was "scaring" me with was clear to me. I thought he was saying don't do short sale because if you do you could be in as much trouble as whoever lied on their loan to get the property.

I now understand. Its like what I do when the listing is clearlly a short sale. I give the seller information on the tax implications (and advise them to seek professional advice because I am no expert in that area), and I will now give them something to initial or sign for my protection along the lines of what you explained with going into it too deep - just so that I have some proof that I did mention it to them.

And from there I will move on and do the do job of selling. Until your explanation,it was only clear as MUD what the message was.

Thanks again.

Rosemary Brooks Not a problem at all (I'm starting to feel like I am commenting on my own blog) I just wanted you to know that I have written many articles on different aspects of short sales (which is how Bill and I found each other) You can either just research my blog or start here with 25 articles that all have the tag SHORT SALE.

http://activerain.com/blogs/mrhemet/tags/short%20sale

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR®
Mission Grove Realty

Ohhh! Thanks John. So it was worth me sticking with this post..... I will check them out. I can tell you have a great deal of experience in this area. I have written a few myself see (mother and daughter blog). One day I will put them all in one area as you have.

Thank you Bill for bringing the subject up. Just goes to show that posts are not for everyone but they don't touch someone.

Thanks so much!

JUL

2007

Wow, a lot of opinions on this blog. Now, I'm going to throw my 2 cents in. Currently, I have a short sale listing that my seller refinanced back in Oct. 2006, the townhome appraised at $162 and he took all of the equity out of it!! Low and behold, he relocated in January (he thought he might be moving when he refinanced), he called me in April to list his home. I told him what paperwork that I would eventually need for his short sale packet and as of today I am still waiting on it. However, I also suggested to him that he consult his accountant and a real estate attorney to get some advice and to figure out what all of his options were!! After talking with him today, I will be taking his home off the market so that he could do a voluntary foreclosure or a deed in lieu of keys. I kept in weekly contact with him and I am positive that I helped him make a decision that he could live with!! I educated him in this regard and am proud of what I have been able to do for this client!!

Karen, that is great that you went in and tried to help. I totally agree that short sale is not always the option but you helped and from that came the decision to what the seller feels is the best option for his/her family. That must give you self satisfaction that you did not just walk away but did your part to help this family exercise their options. Sometimes money is not all that is satisfying. Great job.

Hi Karen, It sounds like you handled the situation perfectly. If it had ended in a short sale you would have "clean hands" and a clear conscience I'm sure.

Thanks for chiming in.

And Rosemary, it sounds like you got something out of this discussion after all. Thanks for hanging in there.

Bill Roberts

JUL

2007

I have learned a lot by reading these comments.

I have a question regarding a possible senario....let's say a borrower is offered a loan modification from their lender on their first loan that actually increased their interest rate, increased their payment and required full payment of all the delinquent amount due--not much of a modification! Of course, they could not accept the modification. After a month of trying to speak with someone at the bank, the modification was revised to cut the delinquency due down from $12,000 upon signing to $7000. The borrower can not pay it. According to the borrower they had a medical hardship that caused them to pay cash for non-insured medical procedures and the husband got a pay cut, hence they couldn't pay the mortgage for several months. (This is in writing sent to the bank with other current financial information.) They are in default and about to have a notice of trustee sale posted. Which do you think would be a better option...short sale or foreclosure?? I'm going to assume the short sale will come in about 20% below what they owe because the market is pretty dead--that's a $100,000 short fall (100% financing plus deliquency penalties and foreclosure fees.). So which is worse...to get a 1099 for $100,000? Or just wait it out and go through a non-judicial foreclosure but ruin their credit further?

To me it looks like foreclosure is better...what does everyone think?

OK Bill you have my attention (again). I have had the opportunity to talk to people that asked me to list their home in short sale and I have advised that short sale is not the only option (I tell everyone all the options that I know about first). In fact, my introduction letter states the many options from forbearance, reinstatement, HUD counciling and/or credit counseling, regular sale if there is equity, to short sale or bk-13. I do not make the decisions I just tell them the different options and I do not lock it in to just what I am saying are the options I advise them to talk to tax professionals and I will go and contact the lender for them to get that ball going.

I do all I know how to do to at least help them because from what I have experienced most of them just need someone to listen and encourage them to do something or they will be out of the home because they will run out of time and the lender will just take the home.

BUT.... you are right, so right. I have learned something from your postings and alot of the others who have shared their knowledge and opinions. I so appreciate AR and the education that I have gained on this and other subjects. Keep posting and keep pushing me and others to get the points you are making.

Thanks a bunch.

Hi Shari, your client obviously doesn't have any equity but I'm not convinced of the shortfall. What is the house worth in your opinion? Could you "sell" the house to someone who has no credit but has enough cash to satisfy the lender for reinstatement? An AITD or some other form of land sale contract might be a solution. If the seller has "clean hands" a short sale might also work if the lender is so inclined to allow it.

Good luck!

Bill Roberts

Rosemary, your welcome. good luck. Just be careful.

Bill Roberts

OK, I will.

JUL

2007

Hi Bill,

There is a shortfall of approximately 15% from their loan amount plus they have some delinquent payments and fees/penalties. I base this off of 2 low-ball offers I have gotten, however, not many agents want to touch short sales in our area so they just don't bother to show them. Whether or not the bank will accept something so far off the loan amount, I have no idea. So far they have not shown much cooperation regarding a meaningful loan modification. (If these people had an extra $12,000 sitting in a bank account they would have paid their mortgage!)

I have told them the IRS will tax them on the shortfall but now I've got the low ball offers, which would make the tax bill substantial. Which has a worse long-term affect --an IRS debt or a foreclosure on their credit for 10 years? Also, these people do not have an accountant other than picking up the phone and calling H&R Block. I don't think anyone wants to take over these payments on a house that isn't worth the loan amount.

Hi Shari,

If you want to pursue a short sale there are several things to do first. one is to make sure that the documentation required by the bank to evaluate the short sale application does NOT put your clients in a situation where they are giving evidence against themselves. This is MOST IMPORTANT.

Secondly, if you need to support a sales price so far below the loan value then you should obtain an appraisal from an appraiser on the lenders approved list. This appraisal will be taken very seriously by the bank's loss mitigation department. They will realize that if they repossess "(foreclose) that will be the maximum they could get at sale and they would have to eat their costs of foreclosure, repairs, marketing, and lost interest PLUS they would have an REO on their books. Don't wait for the lender to get a BPO. After all it is just an opinion of some broker who is not necessarily trained in appraisal techniques and is only receiving few bucks for the BPO. The lender would truly prefer to have your appraisal.

Thirdly, convince your short sale buyer o make his offer at or above the appraisal. If the offer is below appraisal the lender might decide that it is better to foreclose.

Bill Roberts

P.S. thank you, you have convinced me that I need to post this again. This answer will serve as the basis of my next post on shart sales.

JUL

2007

I am trying to buy my first home - first advertised as "possible short sale" and it is now a short sale. Have been waiting and waiting to hear if it will be approved. First Countrywide (seller's bank) said it would take 30 days then after 30 days they said 2 more weeks and now it has been 2 weeks and I have heard nothing. I wish I read this before I tried buying this house. It is way more complicated and takes more patience than a first time homebuyer may have. My apartment lease is up soon and the original closing date came and went. Unfortunately the house appraised for more than we offered (even though we offered the full asking price listed by the seller's realtor) so they may reject the sale. Then again, the house has been on the market for 6 months with no bites at a higher price and houses are for sale all over that town and not moving. At this point I don't even care, I just want to know either way.

Realtors: Make sure you tell your Buyers that they need months of patience in which there may be no contact at all and they will have no idea what is going on.

Hi Tara, Your situation is typical of short sale transactions, I'm sorry to say.

You say the appraisal came in higher than the listed price. The real estate agent CANNOT list a short sale at a stated price unless they have prior approval from the lender, which they won't get.

You may have a cause of action against the agent for misrepresentation. However, I would want to know about the appraisal. Was it an actual appraisal from a licensed appraiser or was it a Broker's Price Opinion (BPO)?

If you really want to buy this house you will need an appraisal to obtain your own financing. That appraisal will carry a lot of weight with Countrywide's loss mitigation department.

On the other hand, maybe you should just go buy something else where the price is not subject to the whims of a lender, and you can close in a relatively short time.

Good luck.

Bill Roberts

JUL

2007

Excellent comments from everyone on this highly topical flavor of the year.

In a down market, which most of us are experiencing, some more than most, It is difficult for homeowners who are experiencing financial hardship, due to job loss income loss, medical or just a previous bad financial decision to find a solution on avoiding foreclosure.

Creative financing could be the proverbial band aid; however, this is not a scratch that needs to be protected, in many cases it could be considered as a hemorrhage.

Placing people with ‘no credit' could very seriously compound the problem at a later date.

The alternative to short sale if no income or equity is available, is what?

Foreclosure?

The impact of which worsens the innocent parties who are keeping current on their loans: Vacant abandoned properties leading to higher rates of crime and decreasing neighborhood values. R.E.O sales, competing against the non pre- foreclosure listings, pulling prices down further.

Banks collapsing, investors loosing trillions of dollars. The situation gets worse.

In Las Vegas, the term throwing good money after bad is used frequently at the gambling tables and the event of doing such typically ends in disaster.

I encourage all of us professionals to first learn the short sale process prior to taking a listing that falls in to the short sale category, and subsequently council the buyers agents and buyers on the length of time needed to complete the process.

In some cases it may be better for the homeowner to let the property foreclose but not before exploring all the avenues.

Chris Giddings

Thanks Chris for weighing in. Obviously there is no simple solution or pat answer. Every case is unique.

Bill Roberts

JUL

2007

Hi Bill, You said in a previous comment "if you need to support a sales price so far below the loan value then you should obtain an appraisal from an appraiser on the lenders approved list".

As an appraiser, I'm curious as to who pays for the appraisal. It seems like the homeowner would be a little cash poor to pay $350 for an appraisal. Are you suggesting the listing agent pay for it out of pocket?

Well Rita, I certainly don't expect you to work for free, but some appraisers are willing to wait for payment until COE. Ultimately, the buyer needs to pay for an appraisal for his financing, with a simple rewrite it could be the same appraisal.

Bill Roberts

Great comments from everyone, there is definitly some opinions out there on the subject of short sales. Bill, a great post.

Carrie, thank you.

Bill Roberts

Bill

Is the comment you're referring to? I didn't sense a question in you're response, which by the way I don't necessarily disagree with you. I like to believe that market forces were the catalyst behind the hyper-appreciation of the last decade, but have serious doubts.

Hi Ed, thanks for coming back. The whole purpose of this post was for the agent to avoid recommending that the client (property owner/borrower) provide "testimony" against themselves. It had nothing or next to nothing to do with price. Although "price" did allow some borrowers to take out equity loans which they would not be able to handle.

I'm not advocating dishonesty, just adhering to the principles of fiduciary duty.

Bill Roberts

Bill

We're on the same page except in one matter. I have less faith in human nature than you, meaning the catalysts that caused properties to increase so dramatically in value. Personally, I hope you're right.

Ed, We could get into a full-blown discussion on the "economics" of price but I think that I want to reserve that for another post altogether. I hope you'll come back when I open that particular can of worms.

Bill Roberts

JUL

2007

Thank you very much for sharing, that was good information.

Shane, come back often.

Bill Roberts

AUG

2007

Bill,

Thanks for the post. The spiral is here whether we like it or not. 187 foreclosures in May tells me that a lot of people ran out of options. Most couldn't sell the property anyway. Short sales should be a course of last resort. Unfortunately, our economy is not helping. Everyone facing foreclosure is not doing so because they've overextended themselves. Spouses/partners have passed away, companies have been plundered leaving people unemployed/without pensions, seniors have been scammed by the supposed "professional mortgage consultant",hours have been cut/jobs outsourced and paychecks reduced. The list goes on and on. The fact remains people are in dire situations and the remedies must be extreme. Alas, a short sale is the answer for many. The work involved is extreme, but then so are the circumstances.

Good point William. It is true that a lot of people got into loans they really had no business getting into and of course, when finances are stretched to the limit, all it takes is one problem, job loss, illness, etc. and the house of cards topples over.

I do agree with Bill though that other options should be looked into first, when possible. If everyone is railroaded into doing a short sale when they could have done something more beneficial for them, the short sale agent will be no better than a scamming ""professional mortgage consultant" that only cares about himself.

Hi Bill, Thanks for coming back to read this post. I am not 100% opposed to short sales. In some cases it is the appropriate course of action. However, that said YOU need to be very careful in what and how you advise your client. You could be putting them in a worse situation in which case it could put you in a bad situation as well. Study all you can and THINK about it very carefully BEFORE jumping into short sales.

Bill Roberts

AUG

2007

We are getting an increase in short sales here too because the values have decreased. I never thought about the sellers getting in trouble if they did a no-doc loan, etc. but am glad I read this. I am planning on taking a class in short sales as soon as one comes up.

Hi Phyllis, you can get a "better" education right here on AR. Just read everything you can find. There are many people who have commented here that have posts of their own on short sales. I have posted several myself. Good luck but be careful.

Try here.

Bill Roberts

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